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5-year decline in auto service sales coming to an end?

Auto Repair Industry Expected to Rise

Nov. 15, 2013—A five-year decline in auto service sales could be coming to an end, according to reports published by investment analytics companies NuWire Investor and Blue MauMau.

In recent articles published by both companies, they report an expected upturn in the repair industry based on increased vehicle sales and a trend of customers addressing repairs they may have previously delayed due to tighter budgets.

The industry has experienced an average decline of 2 percent in annual revenue over the last five years, which has been believed to be caused by a weak economy and more self-repairs by vehicle owners. Hybrid vehicles and other technological advances in the automotive industry have also played a role. These new designs require updated and often expensive technology, additional training for mechanics and less frequent traditional repairs (like tune-ups) that are a source of recurring revenue for independent auto repair shops.

Looking to the future, a study from the Freedonia Group cited in NuWire’s report, expects a 4 percent growth in the $86.2 billion U.S. automotive repair and maintenance service industry annually. With the average age of vehicles on the road expected to stay over 10 years, experts have predicted achieving 200,000 miles and beyond will become the norm, leading to more repairs on post-factory warranty-age vehicles.

The NuWire report went on to describe how the “needs-based nature of the industry” and a recovering economy is expected to produce average annual revenue growth of 1.2 percent over the next five years, with auto mechanics industry revenue reaching $54.7 billion by 2017,” according to an auto repair market research report from IBIS World.